Alternative dispute resolution (ADR) is a term that refers to several different methods of resolving disputes outside traditional legal and administrative forums. These philosophically similar methodologies, which include various types of arbitration and mediation, have surged in popularity in recent years because companies and courts became extremely frustrated over the expense, time, and emotional toll involved in resolving disputes through the usual legal avenues. The adversarial system is expensive, disruptive, and protracted. More significantly, by its very nature, it tends to drive the parties further apart, weakening their relationship, often irreparably. Today, legal and corporate acceptance of alternative dispute resolution as a legitimate remedy for addressing business disagreements is reflected in the language of business contracts. ADR contingencies have become a standard element in many contracts between companies and their employees, partners, customers, and suppliers. Virtually every state has experimented with some form of ADR. With the growth of ADR has come a growing number of organizations and associations designed to assist commercial entities in the use of these alternative dispute resolution methods.

More and more companies are inserting alternative dispute resolution (ADR) clauses in their contracts with customers and vendors, and even in agreements with their own employees. ADR processes such as mediation and arbitration can be beneficial for all concerned if they help avoid the cost, delay, and uncertainty of going to court. Mediation, in particular, may offer creative solutions, protection of confidentiality, and preservation of important relationships.

Advantages of alternative dispute resolution

Sometimes people become involved in disputes which, although very important and worrying to those concerned, are better resolved outside the comparatively expensive court system. Some disputes do not have a legal solution, while others may be made worse by court action. There are a number of advantages of Alternative Dispute Resolution in general and mediation in particular over litigation:

• it is usually faster and less costly
• people have a chance to tell their story as they see it
• it is more flexible and responsive to the individual needs of the people involved
• it is more informal
• the parties' involvement in the process creates greater commitment to the result so that compliance is more likely
• the confidential nature of the process
• Alternative Dispute Resolution is more likely to preserve goodwill or at least not escalate the conflict, which is especially important in situations where there is a continuing relationship.